عوامل موثر بر آمادگی شرکت های بزرگ لیست نشده برای پیاده سازی سازگار استانداردهای بین المللی گزارشگری مالی در پرتغال
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|21504||2012||16 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of International Accounting, Auditing and Taxation, Volume 21, Issue 2, 2012, Pages 169–184
The Sistema de Normalização Contabilística [SNC] is the Portuguese title for the corpus of International Financial Reporting Standards [IFRS] that have been adapted for use in Portugal by unlisted companies. Based on an analytical framework that draws on aspects of new institutional theory, we surveyed 116 large unlisted Portuguese companies in September 2009 to identify factors associated with their preparedness to implement the SNC. Generally, their degree of preparedness was low. Institutional factors that influenced the degree of preparedness positively included the participation of a parent company in conversion procedure decisions, the presence of exclusively Portuguese shareholders, the conduct of export activities, and mimetic behaviors. The results reveal that important insights can be obtained from complementing a study of isomorphic influences with the concepts of resistance and institutional logic. Though coercive and mimetic institutional factors influenced levels of preparedness positively, the preparedness process was undermined by resistance within the Portuguese accounting profession and by the embeddedness of code-law practices in the prevailing logic.
From 2005 onwards, compliance with International Financial Reporting Standards [IFRS] became compulsory for listed companies in many countries (including those in the European Union), consistent with the “inexorable and irreversible rise of IFRS as the global accounting benchmark” (Chua & Taylor, 2008: 463). Adoption of IFRS has major implications for firms. The conversion from national accounting standards to international accounting standards is complex and time consuming. Differences between national accounting standards and IFRS need to be identified and reporting processes adapted ( Ernst & Young, 2006). Additionally, cultural influences and reporting traditions have the potential to confound the process of conversion. Large economies such as China, India, and United States [US] are engaged in projects intended to lead to convergence with IFRS. In the particular case of the US, since 2007 the Securities and Exchange Commission [SEC] has accepted foreign private issuers’ financial statements that are prepared in accordance with IFRS without requiring reconciliation to US Generally Accepted Accounting Principles [GAAP]. The SEC is also currently discussing the possibility of a “Condorsement” approach to IFRS. This option combines an endorsement mechanism of IFRS with a transition process in which US GAAP would fully converge to IFRS over a defined period of time (e.g., five to seven years) (SEC, 2011). Additionally, in May 2008, the Governing Council of the American Institute of Certified Public Accountants [AICPA] voted to recognize the International Accounting Standards Board [IASB] as an accounting body for purposes of establishing international financial accounting and reporting principles. Appendix A of AICPA Rules 202 and 203 was amended to give AICPA members the option to use IFRS as an alternative to US GAAP. Thus, a key professional barrier to using IFRS (including IFRS for small and medium sized entities [SMEs]) has been removed.1 Consequently, the degree of preparedness of investors, companies, and other constituents, implicated in the incorporation of IFRS into US financial reporting systems, has become an important matter in the US. This matter is mentioned in several documents issued by the SEC as something that should be assessed when evaluating alternative approaches to adopting IFRS in the US (e.g., SEC, 2010a, SEC, 2010b and SEC, 2011). Several studies have discussed problems of implementing IFRS (e.g., Alp and Ustundag, 2009, Ding and Su, 2008, Jaruga et al., 2007, Jermakowicz and Gornik-Tomaszewski, 2006 and Peng and van der Laan Smith, 2010). However, with the exception of the study of listed companies in Portugal by Guerreiro, Rodrigues, and Craig (2008), no published research has systematically evaluated the degree of preparedness of companies to adopt IFRS. This has motivated us to extend Guerreiro et al.’s (2008) study by exploring the extent to which large unlisted Portuguese companies were prepared, in September 2009, to adopt the new Portuguese accounting system, Sistema de Normalização Contabilística (SNC – Accounting Standardization System). This new system is based on IFRS and was implemented from January 1, 2010. In analyzing the preparedness of Portuguese companies to adopt the SNC, we combine the initial framework of DiMaggio and Powell (1983) with more recent perspectives of institutional theory that accommodate change, strategic choice, organizational resistance, and institutional logics ( Broadbent et al., 2001, Lounsbury, 2007, Marquis and Lounsbury, 2007, Oliver, 1991 and Thornton and Ocasio, 2008). This study improves understanding of the institutional elements associated with successful preparedness to adopt adapted IFRS. The explanatory variables are classified as coercive, normative, and mimetic processes (DiMaggio & Powell, 1983). To assess the degree of preparedness of Portuguese unlisted companies to adopt the SNC, a proxy was developed to capture the conversion practices used. The institutional framework adopted is concerned primarily with how companies relate to the institutional environment, and how the effects of social expectations on companies affect company characteristics (DiMaggio & Powell, 1991). Several studies have revealed that organizations are very cognizant of the societal context and institutional rules and requirements to which they must conform in order to receive support and legitimacy from the environment (Granlund and Lukka, 1998, Mezias, 1990, Palmer et al., 1993 and Touron, 2005). Portuguese unlisted companies are no different: they are aware of the pressures they face from institutional constituents. These pressures have to be weighed by them when they are preparing to adapt their accounting practices (Hyvönen, Järvinen, Pellinen, & Rahko, 2009). Hitherto, research on accounting harmonization has focused largely on the pre-adoption phase of IFRS (e.g., advantages, disadvantages, and obstacles to convergence); and on the post-adoption phase of IFRS (e.g., measurement of accounting harmonization and adoption effects). Research has failed to address the “middle-moment” in which companies establish mechanisms for translating new organizational procedures: that is, for interpreting and reformulating accounting practices. When new structures are being formed or changed, the effects of differentiated institutional logics (that set the grounds for action by individuals and organizations) become more evident. Accordingly, the preparedness of companies to adopt IFRS (or adapted IFRS) provides an ideal context to understand organizational behavior, the institutional logics at work, and the link between organizational forms and institutional expectations. Additionally, by applying institutional theory to unlisted companies and by moving beyond economic explanations, we broaden the scope of previous studies of the adoption of international accounting standards and improve understanding of the behavior of unlisted companies. We seek to understand whether (near the time for mandatory adoption of adapted IFRS for use in Portugal) unlisted companies had a different level of preparedness than when listed companies adopted IFRS in consolidated accounts in 2005 ( Guerreiro et al., 2008). Thus, we respond to questions posed by Meek and Thomas (2004: 31): “What about unlisted companies and companies’ nonconsolidated (i.e., individual company) accounts, particularly those from European code law countries? Will they continue to reflect national accounting systems, or will they shift away from them?” Our study complements recent explorations of the convergence practices of listed companies in non-common-law countries ( Latridis and Rouvolis, 2010 and Navarro-García and Bastida, 2010) by extending understanding of the adoption of adapted IFRS to unlisted companies within non-common-law countries. Often, even within the same country, listed and unlisted companies exhibit different accounting practices. This can be attributed to the fact that the market for their financial reporting differs substantially. Even though private firms do not face the agency problems of listed companies, they do face an information asymmetry problem that affects their ability to engage in contracting with external parties (Francis, Khurana, Martin, & Pereira, 2008). As a consequence, they use IFRS to improve the quality of their financial reports. Thus, it is important to understand how unlisted companies embrace new accounting systems, based on IFRS, because such systems are being adopted worldwide. The present study differs from, and extends, Guerreiro et al. (2008) in important ways. First, the focus here is on preparedness to adopt an IFRS-related regime of accounting standards by unlisted companies, rather than listed companies. Second, the findings are analyzed using a framework of new institutional theory. Guerreiro et al. (2008) did not specify a theoretical framework. Third, the present study is conducted six years later (2009 versus 2003) and draws upon many more responses for empirical support (116 versus 31). Fourth, the present study provides a composite measure of the preparedness of unlisted companies to adopt IFRS (as adapted in the SNC). This composite measure incorporates a much wider set of conversion procedures that better captures the ability of unlisted companies to deal with IFRS. We report the results of completed mailed questionnaire survey responses from 116 large Portuguese unlisted companies at the end of 2009 (the last quarter prior to conversion to the SNC). The results are consistent with Guerreiro et al. (2008) in revealing a low level of preparedness in the last quarter before the transition. The fact of a company's engagement in export activities was significant in both studies. Nonetheless, several factors that proved to be important as incentives for the preparedness of listed companies were not significant for unlisted companies. Importantly, some other factors were revealed to be significant in explaining the general level of preparedness of unlisted companies to adopt the adapted IFRS standards. These were the participation of a parent company in conversion decision procedures, having Portuguese citizens as capital owners, and mimetic behaviors. Our findings emphasize that the evolution of an organization's accounting practices is shaped fundamentally by coercive and mimetic pressures; and that attention should be paid to normative embeddedness and competing institutional logics as sources of organizational resistance to broad-scale institutional changes. The following section outlines the theoretical framework adopted. Hypotheses are then developed concerning the factors expected to affect the degree of preparedness of unlisted companies to adopt the SNC. Subsequent sections outline the research method and empirical model, present results, and enter conclusions.
نتیجه گیری انگلیسی
This investigation of the preparedness of large Portuguese unlisted companies to adopt the SNC on 1 January, 2010 has used a theoretical framework grounded in new institutional theory. In the last quarter of 2009 the level of preparedness was low, possibly due to the short elapsed time between the formal announcement of the adoption of the SNC (in April 2009) and formal operationalization in January 2010. Nonetheless, the low level of preparedness suggests there was organizational resistance to changes in the regulatory environment, through the actions of professionals and organizations that were shaped by broader institutional logics (Thornton & Ocasio, 2008). The prevailing logic of the Continental tradition (inherent in the Portuguese accounting system) hindered isomorphic pressures to adopt the new laws and SNC standards. The new practices and symbols associated with the new accounting system were bound to an unfamiliar common-law logic. However, the new normative prescriptions were yet to be internalized by accountants. Adoption of the SNC implied a shift in the dominant logic in the accounting field to one that was yet to be accepted as legitimate by Portuguese companies and by the Portuguese accounting profession. When logics are consistent and easily taken for granted, they are most influential in a field. However, consistent with Hyvönen et al. (2009), we confirmed that when competing logics are in play in the same setting, they can trigger conflict (Owen-Smith & Powell, 2008); and thus, they can undermine the progress of the preparedness process. These conclusions are consistent with the non-significant results of the hypotheses linked to normative pressures. Support of the official Portuguese accounting professional body (Ordem dos Técnicos Oficiais de Contas – OTOC – Order of Certified Accountants) for the new accounting rules only became clear after the Portuguese government issued the Decree-law with the new accounting rules in July 2009. This support was negotiated between the Portuguese government and OTOC. As a concession, the accounting profession's social status was improved from Chamber to Order (Order is the most important status that a profession can reach in Portugal). The number of representatives of OTOC on the Portuguese Accounting Standards Board, sponsored by government, increased from one to two. Only then did OTOC become more committed to conducting professional training on IFRS, especially during October and November, 2009. This process of negotiation with institutional stakeholders to exchange concessions is described by Oliver (1991) as a compromise strategy (bargaining). This process reveals professional associations are individual organizations that pursue goals and promote self-interests actively. Tolbert and Zucker (1996) contend that institutionalization involves the development of some degree of social consensus concerning the value of a new structure. This was not achieved for the new structure provided by the SNC. The late acceptance of the new accounting rules by the Portuguese professional accounting bodies meant that the SNC was not translated into normative rules capable of guiding professional behavior. This was particularly the case in the period of preparedness and the transition to the new accounting system. Resistance by the Portuguese accounting profession should be understood in the context of a code-law country, in which the imposition of a common-law logic conflicted with the prevailing code-law logic. Consequently, additional difficulties were associated with the accounting change. Though research on institutional logics usually highlights how this approach deviates from institutional analysis focusing on isomorphism (Lounsbury, 2007, Lounsbury, 2008 and Marquis and Lounsbury, 2007), we reveal a fundamental link between both. Our results indicate that coercive and mimetic factors are important in understanding the degree of preparedness. But, due to the resistance of the Portuguese accounting profession in changing the prevailing logic, normative pressures were not significant factors in the preparedness of unlisted companies. A positive influence on the degree of preparedness was associated with participation of a parent company in decisions regarding conversion procedures (H1), national ownership (H2), mimetic behaviors (H5), and engaging in export activities (H6). Higher levels of preparedness of companies in which the parent company is involved in the conversion process lend support to the influence of resource dependency in encouraging subsidiary companies to adopt accounting procedures that accord with the needs of the ultimate parent owners, consistent with Mezias (1990). The results reflect the desire of corporate conglomerates for a single accounting system for consolidated and individual accounts. This will help them to align parent company accounting with the accounting required by their affiliates. Companies with only local owners are better prepared to adopt the SNC than companies with foreign owners, consistent with H2. Thus, national owners influence the level of preparedness positively. National owners are more aware of the implications of changing the accounting system than foreign owners, and are more aware of the importance of consonance with the new rules. They maintain higher expectations about the success of the conversion process due to legitimacy concerns. This is consistent with the concept of legitimacy proposed by Suchman (1995) in which there are two complementing perspectives: an institutional view emphasizing how constitutive societal beliefs become embedded in organizations; and a strategic view emphasizing how legitimacy can be managed to achieve organizational goals. Of the 67 companies with only national owners, 35 (52%) are subsidiaries of national parent companies that were making the conversion to the SNC as well. Shared rules and understandings between national parent companies and their subsidiaries about the appropriate organizational behavior in the conversion process influenced levels of preparedness positively. Of the 44 companies with foreign owners, 36 companies (or 82% of them) are controlled by foreign parent companies. However, only four of these parent companies influenced the preparedness of their subsidiary companies. Thus, despite concerns of legitimacy, the internationality of the owners is not an incentive for unlisted Portuguese companies to be better prepared. The importance of mimetic behaviors on the levels of preparedness shows a general tendency for companies to imitate the accounting procedures of others in order to appear legitimate in their organizational field. Imitation of accounting practices of successful organizations has been effective in improving the degree of preparedness, consistent with findings that mimetic mechanisms are a means of gaining competitive advantage (Collin, Tagesson, Andersson, Cato, & Hansson, 2009). In addition, the mimetic behavior of export organizations operating in an international commercial field revealed such operations to be an important argument for the adoption of IFRS. Comparison of the results with Guerreiro et al. (2008) reveal that important incentives for listed companies to be prepared to adopt IFRS for consolidated accounts are not equally important for unlisted companies to be prepared to adopt the SNC for non-consolidated financial statements, with one exception: commercial international activity. Guerreiro et al. (2008) concluded that the best prepared listed companies were large companies, with low levels of profitability, with commercial internationalization, and with multinational auditors. However, the present study has shown that size, profitability, and auditor type were not significant in explaining preparedness of unlisted companies to adopt the SNC. One important factor influencing this difference is that the adoption of SNC for non-consolidated accounts involved a much more complex and detailed conversion process than for consolidated accounts. Large companies with more complex structures, and dealing with complex operations, have experienced many difficulties in being fully prepared to adopt the SNC in non-consolidated accounts. Multinational audit companies are more prominent in large companies (as Table 4 shows). However, their experience and knowledge of the SNC/IFRS was insufficient to overcome the complexity of the conversion process in large companies, including the specific requirements of the Portuguese taxation system for non-consolidated accounts. Thus, multinational audit companies were not a distinctive factor leading to better preparedness, either in large companies, or in smaller companies (in which they are less present). Lower levels of profitability were also not related to higher levels of preparedness to adopt the SNC. Guerreiro et al. (2008) concluded that less profitable listed companies were more eager to adopt of standards that were considered less conservative, and were likely to boost their reported rate of profitability in capital markets. As unlisted companies rely more on private information than on public financial statements in contracting with other parties (Ball & Shivakumar, 2005), profitability is not such a strong incentive to improve their preparedness to adopt the SNC. Nonetheless, these differences in the results should be considered in view of important differences between the two studies: the different operationalization of the variable PREP (which include the use of some different questions to elicit the preparedness of companies to adopt a new accounting system), the elapsed time between the two studies, the different type of accounts (consolidated/individual), and the different institutional requirements faced by listed and unlisted companies. These factors impair a straight comparison between the two studies. The main shortcomings of this study are related to survey research. The data collection assumes that respondents had adequate knowledge to answer the questions, and that they answered in a conscientious and truthful way. Additionally, the scarce literature about the pre-adoption phase of IFRS implies a degree of subjectivity when operationalizing the PREP variable. Although the assessment and conversion procedures were supported by implementation guides issued by influential accounting firms, the inclusion of other procedures could result in a different measure that also is indicative of PREP. This paper profiles the unlisted companies that have prepared successfully for the adoption of adapted IFRS; develops general understanding of the conversion practices of unlisted companies; and explains why unlisted companies have exhibited a wide-ranging degree of preparedness to adopt the SNC. The results should be helpful in the numerous countries that are yet to adopt IFRS or IFRS adapted for unlisted companies (e.g., Turkey, Japan, Mexico).9 Standard setters, regulators, governments, business, and professional accounting associations in those countries will be better able to develop their strategies if they know the type of unlisted companies that are likely to need encouragement to comply with a new (or adapted) regime of accounting standards. In the US this knowledge should be beneficial in defining strategies for transition to IFRS. Additionally, it should help in deciding which companies would benefit from a gradual transition to IFRS and which companies should have the option to choose a “big bang” transition. Our findings reflect why the SEC is concerned about exempting large multinational corporations with foreign subsidiaries from a gradual transition because these companies “[h]ave financial and human capital resources to facilitate a big-bang incorporation of IFRS” (SEC, 2011: 21–22) and do not need a long transition period. The scarce amount of research relating to the process of adopting IFRS seems likely to disguise the difficulties many companies will face (or have faced) during their conversion to these standards. Our study contributes to the literature on local adoption of IFRS (Alp and Ustundag, 2009, Ding and Su, 2008, Jaruga et al., 2007 and Peng and van der Laan Smith, 2010) by revealing the importance of the institutional environment and the need for all three isomorphic forces (normative, coercive, and mimetic) to operate concordantly to achieve de facto application of these standards. Normative embeddedness appears to have been difficult to overcome due to the taken-for-grantedness of old values and rules and the embeddedness of those rules and values in the prevailing institutional logic. This is consistent with findings that successful convergence practices rely on introducing changes in accounting standards progressively, particularly when these new standards represent a significant change from the previous accounting system ( Peng & van der Laan Smith, 2010). Accordingly, the competing institutional logics that can hinder preparedness are not limited to the traditional common-law logics versus code-law logics. With respect to accounting practices, some other historically rooted institutional logics establish appropriate ways for individuals and organizations to behave. In the US, for example, the adoption of IFRS demands moving from a rules-based logic to a principles-based logic. This change is not welcome by some important institutional constituents, as demonstrated recently for investors by McEnroe and Sullivan (2011). Further, two unrelated surveys reveal that US companies are unprepared for IFRS convergence.10 A joint survey conducted by Duke University and CFO magazine reported more than one-third of all chief financial officers believed that IFRS convergence was the most pressing accounting matter for 2011; and that only 8.8% of those surveyed considered they were fully prepared. Similarly, in May 2011, the IFRS Readiness Survey by the AICPA 11 reported that approximately 80% of surveyed organizations were unprepared to implement IFRS or had yet to start implementing any IFRS convergence plan. The matter of preparedness to adopt IFRS is clearly a critical issue now in the US. The study reported here should assist the US and other countries committed to making the transition to IFRS, to prepare to do so. However, there remain many matters for ongoing enquiry. For example, to what extent can coercive and mimetic forces overcome normative resistance in the local adoption of IFRS, particularly in code-law countries or rules-based accounting systems? At what point does coercive and mimetic behavior become normative behavior? Subsequent research should address such questions in countries other than Portugal, possibly using the model we have developed here. This would provide further important insight to how the conversion process evolves and how change in normative values occurs. Such research would be particularly beneficial when anticipating the difficulties of implementing an IFRS-type accounting.